National Oilwell Varco, Inc. (NOV) today reported that for its first quarter ended March 31, 2010 it earned net income of $422 million, or $1.01 per fully diluted share, up seven percent compared to fourth quarter ended December 31, 2009 net income of $394 million, or $0.94 per fully diluted share. Earnings per share decreased 11 percent compared to the first quarter of 2009, when the Company earned $470 million or $1.13 per fully diluted share. The first quarter 2010 results included Venezuela asset write-off and currency devaluation charges of $38 million, or $0.09 per share. Net income for the first quarter of 2010 excluding the Venezuela charges was $460 million, or $1.10 per fully diluted share.
Reported revenues for the first quarter were $3.03 billion, a decrease of three percent from the fourth quarter of 2009 and a decrease of 13 percent from the first quarter of 2009. Operating profit for the quarter, excluding the Venezuela charges, was $648 million or 21.4 percent of sales. Operating profit excluding the Venezuela charges improved $26 million, despite the $102 million decline in revenue.
During the first quarter of 2010 the Company's Rig Technology segment backlog of capital equipment booked $618 million in new orders, partially offset by order cancellations, adjustments and change orders of $71 million, resulting in net order additions of $547 million. Backlog for capital equipment orders for the Company's Rig Technology segment was $5.4 billion at March 31, 2010 compared to $6.4 billion at December 31, 2009.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, "Our Company got off to a great start in the first quarter, with all three segments posting higher sequential margins. Our rig-count driven Distribution and Petroleum Services & Supplies units benefitted from cost cutting in prior periods and higher drilling and pressure pumping activity across North America, and Rig Technology continued its skillful execution of orders in its backlog. Aggressive pursuit of manufacturing efficiency across our wide offering of oilfield products, our leading technologies, great service, and, most importantly, the best workforce in the industry, led to solid earnings this quarter.
While near-term gas activity in North America may face headwinds, sustained high oil prices and pressing needs for modern, efficient drilling and well stimulation equipment point to a bright outlook for National Oilwell Varco. We believe that the emergence of new shale gas technologies into new basins, and the steady application of new deepwater production technologies to find and develop new sources of oil will make this an exciting, dynamic industry for many years to come."
First quarter revenues for the Rig Technology segment were $1.9 billion, a decrease of five percent from the fourth quarter of 2009 and a decrease of 14 percent from the first quarter of 2009. Operating profit for this segment was $581 million, or 30.8 percent of sales, an increase of three percent from the fourth quarter of 2009. Sequential operating margin improvement resulted from lower than expected manufacturing costs, which continued to decline on several large projects. The segment has benefitted from experience gained through the execution of numerous rig construction and retooling projects over the last few years, resulting in continued improvement and record margins again in the first quarter, despite modestly lower revenues for the group. Revenue out of backlog for the segment declined 11 percent year-over-year, and was down slightly from the fourth quarter of 2009, to $1.5 billion for the first quarter of 2010.
Petroleum Services & Supplies
Revenues for the first quarter of 2010 for the Petroleum Services & Supplies segment were $923 million, down one percent compared to fourth quarter 2009 results and down nine percent from the first quarter of 2009. Operating profit was $113 million, or 12.2 percent of revenue, an increase of six percent from the fourth quarter of 2009. Sequentially higher sales of downhole tools, drillbits, and wellsite services, mostly from North America, were offset by lower worldwide drillpipe sales in the quarter.
The Distribution Services segment generated first quarter revenues of $334 million, which were up one percent from the fourth quarter of 2009 and represented an 18 percent decrease from the first quarter of 2009. First quarter operating profit was $11 million or 3.3 percent of sales. Operating profit flow-through, or the change in operating profit divided by the change in revenue, was up 100 percent from the fourth quarter of 2009 to the first quarter of 2010. Sales gains in North America were partly offset by declines in international markets.